HKSAR v. Lam Ying Kui

DCCC 850/2023

[2025] HKDC 833

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 850 OF 2023

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REASONS FOR SENTENCE

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1.The Defendant pleaded guilty to 4 counts of “Dealing with property known or believed to represent proceeds of an indictable offence”, contrary to section 25(1)  and (3)  of the Organized and Serious Crimes Ordinance, Cap 455. The particulars of the 4 charges are as follows:

(1)  … between 20 June 2016 and 6 February 2017, both dates inclusive, in Hong Kong, together with WONG Man Kai, knowing or having reasonable grounds to believe that property, namely a total Sum of $2,613,500 Hong Kong currency in the bank account with Hang Seng Bank Limited account number 024-789-288057-883 held under the name of Kcirnmas International Company Limited, in whole or in part, directly or indirectly represented any person’s proceeds of an indictable offence, dealt with the said property (Charge 1);

(2)  … between 6 March 2017 and 8 April 2020, both dates inclusive, in Hong Kong, together with WONG Man Kai, knowing or having reasonable grounds to believe that property, namely a total Sum of $9,409,606 Hong Kong currency in the bank account with Hang Seng Bank Limited account number 024-789-288057-001 held under the name of Kcirnmas International Company Limited, in whole or in part, directly or indirectly represented any person’s proceeds of an indictable offence, dealt with the said property (Charge 2);

(3)  … between 20 June 2017 and 25 May 2020, both dates inclusive, in Hong Kong, together with WONG Man Kai, knowing or having reasonable grounds to believe that property, namely a total Sum of $13,241,602.50 Hong Kong currency in the bank account with Bank of China (Hong Kong)  Limited account number 012-791-1-015280-2 held under the name of AGL Management Company, in whole or in part, directly or indirectly represented any person’s proceeds of an indictable offence, dealt with the said property (Charge 3); and

(4)  … between 7 November 2019 and 14 August 2020, both dates inclusive, in Hong Kong, together with WONG Man Kai, knowing or having reasonable grounds to believe that property, namely a total Sum of $5,169,418 Hong Kong currency in the bank account with Bank of China (Hong Kong)  Limited account number 012-875-2-040168-3 held under the name of OPM Project Studio, in whole or in part, directly or indirectly represented any person’s proceeds of an indictable offence, dealt with the said property (Charge 4).

Summary of Facts

2.The Amended Summary of Facts admitted by the Defendant are as follows:

(1)  This is a “money laundering” case arising from fraud practiced on a local interior design company named “Space Interior Solutions Ltd” (Space Interior), whereby 76 sets of false invoices representing purported renovation works were fraudulently submitted by Space Interior’s staff WONG Man Kai (WONG)  to seek payments amounting to a total sum of HK$30,434,126.50. The payments were made to 4 bank accounts under the Defendant’s control and were further dissipated.

(2)  Space Interior had 4 bank accounts, namely:

(1)  A Chinatrust Commercial Bank account numbered 904-331198693 (SI CTBC Account);

(2)  A Hang Seng Bank (HSB)  account numbered 024-933-082711-001 (SI HSB Account);

(3)  A Dah Sing Bank account numbered 040-774-74-373-1414-9 (SI DSB Account); and

(4)  A DBS Bank account numbered 016-494-471510084 (SI DBS Account).

(3)  WONG had the following personal bank accounts:

(a)  A HSB account numbered 384-341004-888 (WONG HSB Account 1)  and a HSB account numbered 384-255782-668 (WONG HSB Account 2); and

(b)  A Standard Chartered Bank account numbered 410-897310-81 (WONG SCB Account).

(collectively WONG’s Accounts)

(4)  The Defendant had the following personal bank accounts:

(a)  A Hang Seng Bank (HSB)  account numbered 357-361773-668 (D’s HSB Account); and

(b)  A Bank of China (Hong Kong)  (BOC)  account numbered 012-8891083153-9 (D’s BOC Account)

(collectively D’s Accounts)

Predicate Fraud on Space Interior

(5)  MAH Fung Ha Eunice (PW1)  and her husband CHONG Wa Tung (PW2)  founded Space Interior in 2001. WONG was the company’s account service manager and project manager since 2 April 2013, responsible for liaising with customers to ascertain their need in the interior design, and following up on the construction work and material supplies. WONG ceased working for Space Interior since 11 September 2020.

(6)  On 3 September 2020, PW1 found certain invoices relating to projects that WONG had handled to be suspicious. Upon checking, the supplies and/or services said to be provided by the contractors issuing. Those suspicious invoices were found to be untrue and non-existent. Further investigation revealed that on 76 occasions between 20 June 2016 and 13 August 2020, WONG had submitted 98 false invoices to PW1 or PW2, thereby fraudulently inducing Space Interior to issue 76 cheque payments for an aggregate amount of HK$30,434,126.50 to 4 bank accounts respectively held by Kcirnmas International Company Limited (KCI), AGL Management Company (AGL)  and OPM Project Studio (OPM). In more particulars:

(a)  Between 20 June 2016 and 6 February 2017, Space Interior made cheque deposits totalling HK$2,613,500 to a Hang Seng Bank (HSB)  savings account numbered 024-789-288057-883 (KCI Savings Account)  belonging to KCI (Charge 1);

(b)  Between 6 March 2017 and 8 April 2020, Space Interior made cheque deposits totalling HK$9,409,606 to a HSB current account numbered 024-789-288057-001 (KCI Current Account)  belonging to KCI (Charge 2);

(c)  Between 20 June 2017 and 25 May 2020, Space Interior made cheque deposits totalling HK$13,241,602.50 to a Bank of China (BOC)  account numbered 012-791-1-015280-2 (AGL Account)  belonging to AGL (Charge 3); and

(d)  Between 7 November 2019 and 14 August 2020, Space Interior made cheque deposits totalling HK$5,169,418 to a BOC account numbered 012-875-2-040168-3 (OPM Account 1)  belonging to OPM (Charge 4).

(collectively the Subject Accounts)

(7)  On those 98 false quotations or invoices, KCI, AGL and OPM’s company names as well as the details of the Subject Accounts were shown. In fact, none of KCI, AGL or OPM had provided services to Space Interior or its projects. There was never any legitimate reason for Space Interior to make payments to KCI, AGL or OPM. PW1 attended the registered addresses of KCI, AGL and OPM and no such companies were found.

(8)  On 11 September 2020, WONG was arrested by the police. WONG claimed, in a cautioned interview, that (1)  he represented to the Defendant that he did not have any company bank account and therefore he could not cash in the cheques issued by Space Interior, and (2)  he was the one who issued the false invoices to Space Interior without the Defendant knowing their falsity. On 4 March 2022, WONG left Hong Kong and he is currently at large.

Corporate Structures of KCI, AGL, OPM and their bank accounts

(9)  KCI was incorporated in Hong Kong on 12 April 2016 and the Defendant was a 90% shareholding member. The Defendant opened KCI Savings Account and KCI Current Account on behalf of KCI on 6 May 2016. The Defendant was one of the accounts’ 2 signatories and was authorized to effect transactions.

(10)  AGL was a sole proprietorship in Hong Kong founded by the Defendant on 3 January 2011. The Defendant opened the AGL Account on behalf of AGL on 7 January 2011. The Defendant was the sole account signatory.

(11)  OPM was a sole proprietorship in Hong Kong founded by the Defendant on 21 June 2019. The Defendant opened OPM Account 1 and a BOC account numbered 012-875-2-040170-6 (OPM’s Account 2)  on behalf of OPM on 21 June 2019. The Defendant was the sole account signatory for both accounts.

Fund Flow Analysis

(12)  Between 20 June 2016 and 14 August 2020, Space Interior deposited a total of HK$30,434,126.50 by 76 cheques (representing the 76 induced payments)  from its bank accounts to the Subject Accounts. A list of the quotations and invoices submitted by WONG and the corresponding payments is accurately set out at Annex 1.

(13)  Between 20 June 2016 and 6 February 2017 (the offence period of Charge 1), KCI Savings Account had 17 deposits totalling HK$2,782,004.17, including 6 cheque deposits totalling $2,613,500 from SI CTBC Account (the subject amount of Charge 1).

(14)  Between 6 March 2017 and 8 April 2020 (the offence period of Charge 2), KCI Current Account had 268 deposits totalling HK$18,476,508.04, including 28 cheque deposits from Space Interior totalling HK$9,409,606 (the subject amount of Charge 2).

(15)  Between 20 June 2017 and 25 May 2020 (the offence period of Charge 3), AGL Account had 170 deposits totalling HK$25,980,615.30, including 33 cheque deposits from Space Interior totalling HK$13,241,602.50 (the subject amount of Charge 3).

(16)  Between 7 November 2019 and 14 August 2020 (the offence period of Charge 4), OPM Account 1 had 30 deposits totalling HK$5,879,402.82, including 9 cheque deposits from SI DBS Account totalling HK$5,169,418 (the subject amount of Charge 4).

(17)  The crime proceeds were layered amongst the Subject Accounts. Of the Subject Funds transferred from Space Interior, approximately HK$1.2 million (around 4%)  was left in the original receiving Subject Accounts, and approximately HK$19 million (around 62%)  was withdrawn by cash.

(18)  Also, within 3 days of the respective dates when the cash withdrawals (HK$19,354,382)  were made, a total of HK$3,545,610 in cash were deposited into WONG’s Accounts.

Arrest of the Defendant

(19)  On 18 September 2020, the Defendant was arrested by the police. He remained silent under caution.

(20)  Upon body search, a mobile telephone and a bank card (which could operate both the KCI Savings Account and the KCI Current Account)  were seized from the Defendant.

(21)  Upon search of the Defendant’s office, company chops of KCI, AGL and OPM as well as a cheque book of KCI Current Accout were found.

(22)  The Defendant’s telephone contained WhatsApp conversations between the Defendant and WONG between 7 February 2017 and 1 September 2020. The conversations show that, among other things, the Defendant and WONG had a mutual understanding that a proportion of the funds received from Space Interior (around 5% to 8%)  would be kept by the Defendant and the remainder was to be returned to WONG.

Inland Revenue Department Records

(23)  Between the financial years 2016/2017 and 2019/2020, the Defendant only reported AGL’s business for profit tax, no income was reported by KCI and OPM. AGL reported assessable profits of HK$97,881 (for 2016/2017), HK$31,105 (for 2017/2018), HK$56,400 (for 2018/2019)  and HK$33,756 (for 2019/2020).

Conclusion

(24)  At the material time of the offences, the Defendant acted in joint enterprise with WONG in relation to the money laundering offences; the Defendant had reasonable grounds to believe that the properties set out in the charges in the four bank accounts, in whole or in part directly or indirectly represented proceeds of an indictable offence, and he dealt with the said properties.

The Defendant’s Background

3.The Defendant is 36 years old and single. He was educated up to Form 5 and worked as a clerk until 2016.

Sentencing Principles

4.Money Laundering is a very serious offence as it is an attempt to legitimize proceeds from criminal activities: HKSAR v Kamran [2005] HKCU 923 (CACC 400/2004, 12 April 2005, unreported).

5.Under Section 25 of the Organized and Serious Crimes Ordinance, Cap 455, this offence is punishable on indictment with a fine of HK$5,000,000 and imprisonment for 14 years.  There are no sentencing guidelines or tariffs.  Each case depends on its own facts: HKSAR v Shing Siu-ming and Ors [1999] 2 HKC 818; HKSAR v Mak Shing [2002] HKCU 1109 (CACC 322/2001, 18 September 2002, unreported); HKSAR v Kamran (supra); R v Monfries [2003] EWCA Crim 3348 and HKSAR v Boma Amaso [2012] 1 HKC 504.  Deterrence is paramount: HKSAR v Ng Man Yee [2014] 4 HKC 241.  Subject to exceptional circumstances, immediate imprisonment is appropriate even for a first offender: Secretary for Justice v Choi Sui Hey [2008] 6 HKC 166; Secretary for Justice v Siu Yun Yee [2017] 3 HKC 454.

6.The nature of the indictable offence from which the money derives is of no particular significance in sentencing, save that if the accused knows that the money derives from very serious crimes, this will be an aggravating factor: HKSAR v Xu Xia Li & Anor [2004] 4 HKC 16; HKSAR v Yam Kong Lai [2008] 5 HKC 454; HKSAR v Wu Jianbing [2012] 1 HKLRD 781.

7.The gravamen of a money laundering offence is the amount of money handled, not the amount of profit to the Defendants or the loss to the victims: HKSAR v Chen Zhen-Chu [2007] 5 HKC 505.  Relevant sentencing factors include the amount of money laundered, the length of time the laundering subsisted, the degree of sophistication, the number of people involved and whether there was any international element : HKSAR v Yeung Kin Chai [2009] 3 HKC 35.

8.In HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545, the Court of Appeal stated that:

“Sentencing principles

9. There are no sentencing guidelines for the offence of dealing with the proceeds from an indictable offence because the facts vary from case to case. However the following factors are to be taken into account when determining sentence:

(1)  It is the amount of money involved that is a major consideration and not the amount of benefit received by a Defendant in the transaction.

(2)  The culpability of the offence lies in the assistance, support and encouragement offered to the commission of an indictable offence. So a Defendant’s level of participation and the number of occasions on which he is involved in the ‘money laundering’ activities are relevant factors to be considered.

(3)  The offence of dealing with the proceeds from an indictable offence does not necessarily have any direct correlation with the indictable offence in question. However if the relevant indictable offence can be identified, the court may take into account the sentence imposed on the indictable offence per se when determining the sentence of the dealing offence.

(4)  If the case has an international element involving activities carried out across different regions, the court may impose a more severe sentence. This is to protect Hong Kong’s reputation as an international finance and banking hub from being tarnished.

(5)  The length of time the offence lasted.

9.In HKSAR v Boma (supra), the Court of Appeal held:

“25. The problem remains that the circumstances in which the offence may be committed are highly variable. They run from cases where a wife hides money for a husband who is a gambler through to those who wash money that represents the proceeds of vice offences, or trafficking in dangerous drugs, or fraud, or human trafficking or other manifestations of organised crime. Sometimes it is possible to identify the antecedent offence; other times it is not. Sometimes the offender knows the nature of the antecedent offence, sometimes he does not. Sometimes he can be taken to know or believe the monies to be the proceeds of an indictable offence or reckless as to whether or not they were; otherwise he may be shown to know the grounds upon which a reasonable person will so believe without himself actually knowing the funds to be the proceeds of an indictable offence. Sometimes the offender is the perpetrator of the predicate offence but at other times he lies somewhere down the chain. Sometimes he is the beneficiary of the laundering process; other times a conduit. Then there are cases involving an organized and sophisticated scheme where the offender is the director of the laundering exercise; or he may be a lowly employee in the exercise. The offence may involve a single transaction or, on other hand, many transactions over an extended period. Deceit to achieve the objective may or may not be involved. There are cases where all the activity is embraced in a domestic setting but other cases with an international element. This non-exhaustive postulation of the variety of circumstances suffices to illustrate why it is difficult and undesirable to offer guidelines. It is, in other words, a category of offence in which the sentencing judge is called upon to engage his ‘feel’ for the case bringing to bear his sentencing experience bearing in mind at all times the mischief at which the legislation is directed. …

32. At present, however, any sentencing exercise must recognise that the maximum sentence is one of 14 years’ imprisonment …

35. The first factor to which any sentencing court should in this context have regard is the maximum penalty available. It is not possible to identify the worst case possible and difficult to postulate the worst category of case. But it is nonetheless helpful to bear the maximum in mind.

36. The second matter to which the sentencing court must have regard is the fact that in this category of offence, deterrence is paramount. It is to be remembered that “the criminality in laundering arises from the encouragement and nourishment it gives to crime in general. Without it many crimes would be rendered much less fruitful and perhaps more difficult to perpetrate”: R v Basra [2002] 2 Cr App R (S)  469 at 472. …

40. Less helpful though this may be than we had hoped, the best we can therefore do is to identify some of the significant features for which the court should look and take into account, though it is not possible to produce an exhaustive list: we can do no better than echo obvious factors that have been referred to by the cases:

(1)  The nature of the predicate offence, if known, and the penalty available for the predicate offence: see R v Karen Monfries …. So, for example, where the predicate offence is trafficking in dangerous drugs, the offender should expect a sentence significantly greater than where the predicate offence is gambling. It has in this regard been said that: “Those who launder large sums which are the proceeds of drug trafficking play an essential role in enabling the drugs conspiracy to succeed and as such can expect severe sentences comparable to others playing a significant role in the supply of drugs although it has to be borne in mind that Parliament has provided different upper limits to a judge’s sentencing process for dealing in Class A drugs (life imprisonment )  and money-laundering (14 years)” … although it is suggested that there must be a difference between the offender who knows what the predicate offence is and the offender who does not : R v Gonzalez [2003] 2 Cr App R (S)  35 at [13].

(2)  This brings us to the question of the state of knowledge of the offender. This divides itself in two – knowledge of the nature of the predicate offence, where the predicate offence is known to the court; and knowledge of the fact that the funds are the proceeds of an indictable offence:

(a)  Where the predicate offence is known to the court, the question of knowledge of the offender as to the nature of the predicate offence is relevant in that the person who knows the nature of the predicate offence is more culpable than the person who does not: see Gonzales above at [13] and Monfries above at [11]. But this is a question to be approached with considerable caution, since many offenders will assert ignorance of the origin of the proceeds in question, particularly where the offender has deliberately turned a blind eye thereby choosing not to know. In such a case it must be recognised that he is nonetheless “assisting in the original crime, whether with knowledge or blind eye knowledge of it”: R v Basra above at [472]. The scheme and purpose of the legislation is to ensure care and honesty in the handling of other people’s money and those who are prepared to handle money on other people’s behalf and turn a blind eye to the source of that money do so at their own risk: see Attorney General’s Reference No. 48 of 2006 [2007] 1 Cr App R (S)  558 at [24]. So the person who is aware of the fact that he is dealing with proceeds of an indictable offence but deliberately chooses not to ask questions is barely less culpable than the person who asks or who is told.

(b)  As to the second question, there seems to me to be unassailable logic in the scheme of the Australian legislation which draws a distinction in culpability between the person who intentionally deals with the proceeds of crime, meaning the person who knows or believes that the funds in question are the proceeds of crime; the person who is reckless as to that question; and the person who is negligent about it. The legislation makes it a criminal offence to deal with proceeds of an indictable offence where there are grounds to believe that that is the origin of the funds and the offender knows of the grounds, even where the offender does not positively know that the funds originate from the commission of such an offence, so care must be taken in the last category not thereby to dilute sentencing so as to defeat the object of the legislation; but the person who is reckless is more culpable and the person who knows or believes is more culpable still.

(3)  An international dimension will always be a significant aggravating feature; and by international dimension we include money laundered from, or for those operating in, the Mainland.

(4)  The sophistication of the offence is always relevant. This will include the degree of planning and whether deceit is practised to achieve the objective.

(5)  Where the offence is committed by or on behalf of an organized criminal syndicate, that is an aggravating fact.

(6)  It is relevant to take into account whether there is one transaction or many and the length of time over which the offence was committed.

(7)  As in the case of Herzberg, it will be an aggravating feature where the offender continues to launder funds after he has discovered as a fact that the funds are the proceeds of an offence or after he has discovered the nature of an offence which is serious.

(8)  The sentencing court should have regard to the role of the offender and the acts performed by him. In this regard, the director of a laundering operation or scheme should attract a greater sentence than a person engaged by him although sentences should be sufficient to deter those who might be prevailed upon by directing minds. In the case of a person down the chain, the court will wish to have regard to whether a benefit has been received and if so the nature and size of the benefit. But within the category of persons down the chain there will be gradations of culpability. So for example the drug addict or petty crook who is paid a small sum to open an account and hand over its operation to another with no more participation and no more knowledge than that it is going to be used for some sort of crime is much less culpable than an offender of a different sort not “used” in that way.”

10.In Secretary for Justice v Wan Kwok Keung [2012] 1 HKLRD 201, the Defendant pleaded guilty to 1 charge of money laundering.  He laundered $14 million from bookmaking offences on thousands of occasions for 7 years.  The Court of Appeal held that The appropriate starting point should not be less than 4 years and that:

“12. “Money laundering” is a serious offence for not only does it encourage criminal activities indirectly, but also attempt to legitimize the proceeds of crime. In order to crack down on serious crimes, to prevent offenders from getting financial gains, it is necessary to deter the commission of the “money laundering” offence…

13. Generally, the sentence for “money laundering” offence should mainly reflect the amount of “black money” laundered and not the benefit obtained by the Defendant or others. The reason being that it is very difficult to prove the benefit concerned, and in most “money laundering” cases, there may not be evidence to show from what indictable offence the “black money” are in fact derived. Of course if there is information to prove that the “black money” is originated from serious crimes, including drug trafficking, kidnap and blackmail, illegal human trafficking, other organized crimes, etc. or the Defendant’s benefit is huge, then the sentence should be adjusted upward.

14. This Court has, in a number of other similar cases, also listed others factors relevant to the sentence to be imposed including the number of offences, the length of time the offence lasted, the degree to which the Defendant participated in the offence involving “black money” and whether or not it was an organised and sophisticated crime, etc.

15. In HKSAR v Hsu Yu Yi [2010] 5 HKLRD 536, Cheung JA set out the amounts of money involved and the sentences passed in a number of “money laundering” cases. The sentencing starting point is 3 years or so where the “black money” involved is between 1 million and 2 million dollars, 4 years or so where it is between 3 million and 6 million dollars, and could be over 5 years where it is above 10 million dollars”

Discussion

Circumstances of the Offences

11.Leading Counsel Mr Benson Tsoi, SC urged the Court to consider the circumstances of the case.  He submitted that WONG confessed under caution that he represented to the Defendant that he did not have any company bank account and therefore could not cash the cheques issued by Space Interior; WONG was the one who issued the false invoices to Space Interior and the Defendant did not know the falsity of those invoices.  In other words, WONG lied to the Defendant to induce the Defendant to allow WONG to use the company bank accounts.

12.It was admitted that the Defendant knew that WONG was employed by Space Interior.  In fact, it was submitted that that was the reason why WONG stated that he was able to secure the alleged “contracts”.  In other words, the Defendant knew that WONG was in a position of trust.  The alleged contracts placed WONG in a serious conflict of interest with Space Interior.

13.There is nothing to suggest that Space Interior would only enter into contracts with companies.  Even if that were the case, the Defendant knew that it was very simple to acquire a company or register a business.  In fact, the Defendant registered OPM and opened the OPM Account 1 at the Bank of China on the same day.  If the conflict of interest had been disclosed to Space Interior, WONG could have registered a business and opened a bank account for that business himself.  Even if the Defendant thought that the alleged contracts were genuine, it would be evident to any normal and reasonable person that WONG was using the Defendant’s companies to hide his identity in the alleged contracts.

14.There can be no dispute that the Defendant not only used his company accounts to deal with the proceeds, he also allowed WONG to use his companies.  The Defendant knew that his companies were used to enter into the alleged contracts with Space Interior.

15.The Defendant also knew that his companies never provided any renovation work to Space Interior.  There is no dispute that invoices from the Defendant’s companies were issued to Space Interior to obtain payment.  In that regard, the Defendant knew that any invoices presented by WONG to Space Interior were false.

16.The Defendant’s company chops were affixed on the invoices.  It was admitted that the company chops were found in the Defendant’s possession.  There is no evidence that there was only one set of company chops.  If WONG had actual possession of the Defendant’s companies’ chops, the only and irresistible inference is that those chops were given to WONG by the Defendant.  Mr Tsoi submitted that WONG may have used a computer to superimpose those company chops from another document onto the false invoices.  Assuming that that were true, it only means that the Defendant had given a sample document with the chops of his companies to WONG.

17.The Defendant admitted that under his agreement with WONG, the Defendant would keep 5% to 8% of the payments from Space Interior.  WONG’s profit from the alleged contracts would have to be substantial for him to offer such an award.  The total amount received from Space Interior was HK$30,434,126.50.  In other words, the reward for allowing WONG to use the Defendant’s companies was HK$1,521,706.32 to HK$2,434,739.13, which is far in excess of the cost of acquiring and operating a company or business.  No normal or reasonable person would offer such a reward if the alleged contracts were legitimate.

18.The Defendant turned a blind eye to all the abovementioned suspicious circumstances.

19.There is no dispute that AGL existed prior to the commission of the present offences. This sole proprietorship was registered in the Defendant’s name on 3 January 2011.  The Defendant says that AGL was used by his late father to operate a logistic business.  The Defendant was only registered as a sole proprietor because his father had another family in the Mainland.  The Defendant only took over the business after his father’s sudden passing in 2016.

20.However, AGL was not used to receive the proceeds directly from Space Interior in the initial stages.  The Defendant had acquired AGL prior to his father’s sudden passing in late 2016.  KCI was incorporated on 12 April 2016. KCI’s bank accounts were opened on 6 May 2016 (ie shortly before the commission of Charge 1).

21.Between 20 June 2016 to 6 February 2017, KCI’s Savings Account was used to receive HK$2,613,500.  If the Defendant’s reward was 5% to 8%, the amount he received was HK$130,675 to HK$209,080.  This alone is far in excess of acquiring and operating a sole proprietorship or company over a period of less than 8 months.

22.Not only did the Defendant turn a blind eye, the Defendant allowed the KCI Current Account to be used to receive a further HK$ 9,409,606 between 6 March 2017 and 8 April 2020 from Space Interior.  On 20 June 2017, 3 months after the use of the KCI Current Account started, the Defendant also allowed AGL and its bank account to be used to receive the proceeds directly from Space Interior.  Between 20 June and 25 May 2020, Space Interior paid a total of HK$13,241,602.50 into the AGL Account.

23.According to Annex 1 of the Amended Summary of Facts admitted by the Defendant, by 20 June 2017, KCI and AGL have already received a total of HK$4,420,200 from Space Interior.  Under his agreement with WONG, the Defendant’s reward from 20 June 2016 to 20 June 2017 (12 months)  was HK$221,010 to HK$353,616.

24.Despite that and on 21 June 2017, the Defendant founded OPM and opened the OPM accounts with the Bank of China on the same day.

25.OPM was not immediately used to receive the proceeds directly from Space Interior.  It only started receiving direct payments on 7 November 2019.  By that time, KCI and AGL have received a total of HK$18,106,718.50 from Space Interior (See items 1 to 53 of Annex 1 to the Amended Summary of Facts).  The Defendant’s share was hence HK$905, 335.92 to HK$1,448,537.48.  By November 2019 and assuming that the Defendant only took over AGL’s operations in 2016, he already had the experience of running 2 companies (KCI and AGL)  for over 3 years before OPM was used to receive the proceeds.  It must have been clear to him that his reward from the agreement with WONG was far in excess of the cost of acquiring and running a company or sole proprietorship.  Despite that, he founded OPM and allowed OPM and its bank accounts to be used to deal with the proceeds.  Between 7 November 2019 and 14 August 2020, OPM received HK$5,169,418 from Space Interior.

26.Mr Tsoi submitted that the Defendant did not have any knowledge of WONG’s fraud.  However, the Defendant had reason to believe that the funds deposited into the accounts were proceeds of an indictable offence.  The Defendant knew that WONG worked for Space Interior and all the deposits came from Space Interior.  In those circumstances, the Defendant had reason to believe that the indictable offences committed by WONG against Space Interior were in breach of trust, which is very serious.

27.The proceeds of WONG’s fraud were laundered by the Defendant through 4 layers.  This was wholly unnecessary if the proceeds were legitimate.

28.It was submitted that there was no evidence that the Defendant was party to the fraud or had any actual knowledge of the details of the fraud.  This was only because he deliberately turned a blind eye to the above mentioned facts and chose not to ask any questions.  In this situation, he is barely less culpable than the person who asks and who is told: para 40(2)  of R v Boma (supra).

Role of the Defendant

29.Mr Tsoi submitted that there was little sophistication in the arrangement between the Defendant and WONG.  It only involved 2 persons and 76 deposits.  I disagree. In considering the sophistication and/or complexity, in addition to the number of persons involved and the number of deposits, the Court must look at the manner in which the money was laundered.

30.There is no dispute that apart from WONG and the Defendant, 3 companies and 10 bank accounts were involved, including the Defendant’s HSBC account, the Defendant’s BOC account, WONG’s HSBC account 1, WONG’s HSBC account 2, WONG’s SCB account, KCI’s Savings account, KCI’s current account, AGL’s account, OPM account 1 and OPM account 2 (See Annex 1 to the Amended Summary of Facts).  A total of 5 company accounts were involved, and not 4 accounts submitted by Mr Tsoi.  The Defendant admitted that his company name and the numbers of the relevant company bank accounts were stated on the invoices.  In other words, the Defendant gave the number of the 5 different bank accounts to WONG to receive payments from Space Interior.

31.Mr Tsoi stated that the Defendant was used by WONG as a pawn; his role is limited to lending his company accounts to WONG.  The Defendant was a “person down the chain” with less culpability than WONG.

32.I again disagree.  As explained above, the Defendant not only used 5 bank accounts of his 3 companies to dealt with the proceeds, he also allowed WONG to use his companies.  Invoices were affixed with company chops.  Those chops were subsequently seized from the Defendant.  Even if I were to accept that WONG superimposed the image of the company chops on the invoices, there was no legitimate reason for the Defendant to provide WONG with the images of any of his company chops.

33.As for the degree of sophistication involved in the money laundering, out of the 76 deposits from Space Interior, only a part of 5 deposits from Space Interior were paid by the receiving bank account to WONG directly:

Payment	Payment date	Amount (HK$)	Paid from	Paid to
2	2016-08-24	540,000	Space Interior CTBC Account	KCI Savings Account
	2016-08-25	200,000	KCI Savings Account	WONG HSB Account 1
3	2016-10-12	580,000	Space Interior CTBC Account	KCI Savings Account
	2016-10-13	520,000	KCI Savings Account	WONG HSB Account 2
4	2016-11-10	620,000	Space Interior CTBC Account	KCI Savings Account
	2016-11-11	510,000	KCI Savings Account	WONG HSB Account 2
16	2017-09-20	93,000	Space Interior CTBC Account	KCI Savings Account
	2017-09-21	87,000	KCI Savings Account	WONG HSB Account 1
23	2018-01-10	180,000	Space Interior CTBC Account	KCI Savings Account
		105,000	KCI Current Account	WONG HSB Account 2
	TOTAL	1,422,000

34.The remainder of the funds from Space Interior were either withdrawn in cash or paid into the bank accounts of WONG or the Defendant after being transferred through other accounts.  In fact, the layering of the money laundering started as early as the first payment from Space Interior.  AGL became involved after the 2^nd payment from Space Interior.  WONG caused Space Interior to make the 2^nd payment to KCI on 24 August 2016.  On 26 August 2016, the Defendant caused KCI to transfer funds to AGL (See Annex 1 of the Amended Summary of Facts).

35.The Defence appears to have lost sight of the fact that the Defendant has pleaded guilty to 4 substantive counts of dealing with the proceeds of an indictable offence.  He has not been charged with conspiracy to defraud.  WONG was neither a shareholder or director of any of KCI, AGL or OPM.  He was not a signatory of or authorized to operate any of their bank accounts.  It was the Defendant who layered the money laundering by inter-company transfers.  The Defendant was taking a very active role in the money laundering.

Benefit to the Defendant

36.Mr Tsoi submitted that although the Defendant did benefit from the arrangement, the benefit he received was significantly lower than the amount defrauded by WONG.

37.There is no dispute that the Defendant’s benefit was 5% to 8% of the total amount defrauded from Space Interior.  In other words, his benefit was at least HK$1,521,706.33.  That is a very substantial amount.  It is no mitigation to say that the Defendant benefitted less than WONG.

Absence of International/Cross border element

38.There is no dispute that this case is confined to a domestic setting and that there is no international or cross border element.  This is not a mitigation factor.  It only means that there is no further aggravating factor.

Not part of an Organised Criminal Syndicate

39.There is no suggestion that the present case involved any organized criminal syndicate.  However, this is not a mitigating factor.  It merely means there is no such aggravating factor.

Appropriate starting point

40.Mr Tsoi submitted that the present case is distinguishable from the facts of SJ v Wan Kwok Keung(supra).  In that case, the Defendant was carrying out the predicate offence of bookmaking which generated the proceeds of crime.  There were 2,222 withdrawals from 1,696 deposits into his account which totaled HK$14 million.  The Court of Appeal was of the view that “the appropriate starting point should not be lower than 4 years’ imprisonment”.

41.Mr Tsoi accepted that the predicate offence in the present case was fraud.  However, he submitted that this was not in the same category of seriousness as drug trafficking, kidnapping, blackmail or human trafficking.  I disagree.  Not only was the predicate offence fraud, it was also in breach of trust.  The predicate offences in the present case are clearly much more serious than those in Wan Kwok Keung.

42.I agree that there is no evidence to show that the Defendant knew all the details of the fraud.  However, as explained above, it was evident from the facts of the case that what WONG was doing was in breach of trust.  The Defendant turned a blind eye to that fact.  The amount involved in the present case is also far more substantial than Wan Kwok Keung.

43.In summary, I agree that there are differences between the facts of the present case and those in Wan Kwok Keung.  There is no direct evidence that the Defendant in the present case was involved in the fraud perpetrated against Space Interior, there are much fewer transactions and the offences spanned a shorter period.  However, the Defendant turned a blind eye when it was clear that the predicate offence was in breach of trust, the predicate offences are far more serious than bookmaking and the amount involved in the present case is far more substantial than Wan Kwok Keung. The Defendant’s culpability is higher than that in Wan Kwok Keung.

44.Mr Tsoi submitted that the Defendant was not “the director of a laundering operation or scheme”.  As explained above, the Defendant not only received the proceeds, he was the only one authorized to operate the companies’ bank accounts.  He caused numerous inter-company transfers to give the proceeds a veil of legitimacy and made it more difficult to detect.  He took a very active part in the money laundering operation.

45.Mr Tsoi contrasted the present case to HKSAR v Hsu Yu Yi(supra). In that case the predicate offences involved a well-planned fraud with an international element, including bank accounts in Singapore and Taiwan.  The Defendant came from Taiwan for the purposes of committing the money laundering offences.  The whole scheme involved HK$25.8 million and the Defendant personally dealt with approximately HK$2.5 million.  The Court of Appeal held that the appropriate starting point was 3 years and 5 months.

46.Mr Tsoi argued that in the present case, the bank accounts were not opened solely for the purpose of committing the offences.  KCI, AGL and OPM had legitimate businesses and their accounts were used for those businesses as well.  This is wholly contrary to the admitted evidence.  The Defendant admitted that between the financial years 2016/2017 and 2019/2020, no income was reported by KCI and OPM.  Although there were deposits or transfers from 3^rd parties, the majority of the amounts in the subject accounts ended up being withdrawn in cash or paid to WONG or the Defendant (see Annex 1 to the Amended Summary of Facts and Annex 3 to the Admitted Facts).  I do not accept that KCI or OPM had any legitimate business.  It is evident that these companies were acquired or registered for the purposes of committing the present offences.

47.Further, in Hsu Yu Yi, the Defendant only personally dealt with HK$2.5 million over a period of 2 months.  In the present case, the Defendant dealt with just under HK$30.5 million.  The amount involved in the present case is far greater than that in Hsu Yu Yi.  The span of time the Defendant laundered the proceeds in the present case was close to 4 years.

48.Mr Tsoi further submitted that the payments from Space Interior were only a minority of the total number of deposits into the relevant accounts: only 6 out of 17 deposits into the KCI Savings Account, 28 out of 268 deposits into the KCI Current Account, 33 out of the 170 deposits into the AGL Account and 9 out of the 30 deposits into OPM Account 1.  Mr Tsoi admitted that those figures only represented the payments made directly by Space Interior and do not include the transfers subsequently made amongst the relevant accounts.  Those figures clearly do not reflect the reality of the situation.

49.Mr Tsoi relied on Boma.  He correctly conceded that the amount of money laundered was a significant factor in sentencing but submitted that it was not “the be-all and end-all”.  That sentence came from paragraph 38 of the Court of Appeal’s judgment in Boma.  The Court went on to explain why it was not possible to lay down sentencing guidelines for this type of offence and set out relevant factors in paragraph 40 (see above).

50.The operation of those principles can be seen in money laundering cases related to telephone scams. In those cases, elderly victims are told that their family members have been arrested or detained for various reasons.  The victims are thereby persuaded to pay for the release of their family members.  The amounts involved are often quite small (although the amount may represent the victims’ life savings).  Very often, the prosecution is unable to prove that the person who receives the money is involved in the fraud and only proceeds with a charge of money laundering.  The sentencing court must then consider the Defendant’s knowledge of and participation in the fraud.  In those cases, the smaller amounts of money become less significant than the Defendant’s knowledge and participation.  

51.Mr Tsoi then referred to the sentences in a number of cases.  I will deal with each of them in turn.

52.In HKSAR v Lee Yu To (CACC 582/1999, unreported 7 April 2000), the Defendant was a bookmaker.  He operated his bookmaking business mainly in Macao.  He received deposits on illegal bets in his Hong Kong bank account.  The total amount of money deposited was HK$30 million.  The Defendant was convicted after trial and was sentenced to 14 months’ imprisonment.  The Defendant originally sought leave to appeal against both conviction and sentence.  His appeal against conviction was subsequently abandoned.  The Court of Appeal held that the bookmaking was a substantial operation.  The Court found that the sentence was not manifestly excessive:

“We consider that the Judge did adopt a correct starting point. He also gave a sufficient discount for the lack of sophistication involved and the fact that the applicant had not seriously challenged the prosecution evidence”.

53.Firstly, in the present case, the predicate offence is fraud which involved a breach of trust.  In Lee Yu To, although the amount laundered was similar, the predicate offence was bookmaking, which is comparatively much less serious.  In Lee Yu To, only 2 bank accounts were used: the Defendant’s personal account was used to receive money from punters who lost.  Part of the funds were then transferred to a “Banksmart” account to pay winning punters.  No company accounts were used and the transfers were simple.  In the present case, multiple companies and multiple bank accounts were used by the Defendant for multiple layers of transfers.  The money laundering scheme in the present case is much more sophisticated than that in Lee Yu To.

54.In Oei Hengky Wiryo (CACC 109/2005, unreported 24 January 2006), the appellant was convicted after trial for 1 count of bookmaking (Charge 1)  and 2 counts of money laundering (Charges 2 and 3).  The appellant was an Indonesian citizen who occasionally travelled to Hong Kong.  His co-conspirator Kam lived in Hong Kong. Kam was operating a bookmaking business, during the search of Kam’s office, the police found a cheque book originally containing 50 cheques relating to the appellant’s bank account at the Hong Kong and Shanghai Banking Corporation Ltd (HSBC)  with 30 remaining cheques all signed in blank by the applicant.  Some other documents relating to the applicant’s bank accounts were also found.  Subsequent investigations revealed that Kam and the applicant had a number of bank accounts in Hong Kong.  Five of Kam’s accounts had very substantial dealings with 2 bank accounts of the applicant at HSBC and Hang Seng Bank (HSB)  which were opened on 19 June 1997 and 29 June 2001 respectively.  The applicant was sentenced to a total of 5 years and 6 months by the trial Judge (4 years and 18 months for Charges 2 and 3 respectively).  The different lengths of sentence reflected the different time spans and the volume of funds involved.  The appellant appealed against both conviction and sentence, his appeal against conviction was dismissed.

55.The Court of Appeal found that the bookmaking operation was very substantial.  For Charge 2, the appellant’s money laundering activities involving his HSBC bank accounts was from 19 June 1997 to 17 November 2001.  The amount laundered amounted to some HK$698,223,829, which was reduced to HK$236,766,329 to allow for the possibility of double counting.  Charge 3 involved the applicant’s HSB accounts being used to launder some HK$25,495,116 over the period of 29 June 2001 to 12 November 2001, that sum being reduced to HK$11,495,116 to allow for the same possibility of double counting.  The Judge accepted that only part of these funds represented or were believed by the applicant to represent the proceeds of the indictable offence, ie bookmaking.

56.The Court of Appeal held that the sentences for Charges 2 and 3 were not manifestly excessive.

57.Firstly, although the bookmaking was substantial, the predicate offence in Oei Hengky Wiryo was much less serious than the present offence.  Secondly, although the amount that went through the applicant’s accounts were very large, the Court accepted that only part of those funds represented or were believed by the applicant to represent the proceeds of the indictable offence.  The amount accepted as representing or believed to represent the proceeds of an indictable offence is unclear from the Judgment.

58.Suffice it to say, the facts of those 2 cases are very different from the present case.

59.Mr Tsoi referred to paragraph 14 of Hsu Yu Yi where Cheung JA set out the amounts of money involved and the sentences passed in a number of “money laundering” cases.  He submitted that the starting point in those cases ranged from 3 years (where the “black money” involved was between HK$1 million and HK$2 million; 4 years where the amount involved was between HK$3 million and HK$6 million; 5 years or above for amounts over HK$10 million.

60.The summary was acknowledged in Wan Kwok Keung.  The amount of money laundered was HK$14 million.  After considering the fact that the Defendant only derived a benefit of HK$150,000, the Court of Appeal adopted a starting point of 4 years.

61.Mr Tsoi submitted that the above mentioned cases demonstrate that there is no “discernible” or “usual” range of sentence for similar offences.  In any event, an amount of HK$30 million does not fall within the highest range of sentences such as HKSAR v Hui Yat Sing [2008] 4 HKC 577, which involved laundering HK$6.5 billion (which were the proceeds of theft in the Mainland and involved false documentation)  which was used for the purchase of properties or gambling over a period of 6 years.  In that case, after dismissing the appeal against conviction, the Court of Appeal observed:

“55. Our only comment in regard to the sentence is that it is surprising it did not reflect the maximum which can be imposed in the District Court. It is plain that this offence fell inside the worst category of its type, added to which there has been no restitution and not a sign of remorse.”

62.In that case, the Court of Appeal never stated that 7 years was the appropriate sentence.  The Prosecution chose to proceed in the District Court, whose maximum jurisdiction was 7 years.  In fact, the Court of Appeal was clearly of the view that even the maximum sentence in the High Court (14 years)  may be inadequate in Hui Yat Sing and took the opportunity to comment on the same in Boma:

“28. Part of the problem may well stem from the perception of the Department of Justice that by reason of the judgment of this Court, differently constituted but of which I was a member, in HKSAR v Kam Susanto CACC 542 of 2003, 13 May 2005, unreported, that most cases should be tried in the District Court.

29. That was a case in which the amount of money dealt with was over $471 million. It does not appear from that judgment (which, unsurprisingly, was not an appeal against sentence)  whether the court had engaged in any comparative exercise nor is it apparent either from the judgement itself or indeed from my own recollection whether it was influenced by the fact that the sums involved were the proceeds of bookmaking rather than a more serious offence. It is however clear that the court was influenced by a perception that cases of this kind may more easily be tried by a single judge rather than by a jury. Be that as it may, the comment by the court seems to have had an influence which is unfortunate, because an effective seven-year maximum for sums of that order leaves in practical terms very little sentencing leeway for much more usual cases involving several million dollars but serious nonetheless.

30. Two cases in particular, involving vast sums, and an international element to boot, that strike one as astonishing for having been brought in the District Court are:

(1)  HKSAR v Hui Yat Sing and another CACC 29 of 2007, 13 June 2008, unreported, in which the applicant assisted in the laundering of no less than $6.4 billion, the proceeds of a huge theft of money by employees of a bank on the Mainland; and

(2)  Secretary for Justice v Herzberg [2010] 1 HKLRD 502 in which the Defendant was responsible for the international laundering of over $683 million over a prolonged period, conduct that continued after the applicant had been warned about the underlying fraudulent scheme. The Court of Appeal upon review considered a nine-year starting point to have been appropriate.

31. The maximum sentence for this offence is one of 14 years’ imprisonment. Given the number of cases that have come before the courts, given the huge sums involved in quite a few of them, given that laundering the proceeds of offences – often very serious offences indeed – is designed by its very nature to enable criminals to avoid detection, and given the signal importance of preserving Hong Kong’s reputation as an international financial centre of integrity, and given the further vital importance of international cooperation in the fight against money laundering, and therefore against crime which is thereby encouraged, the question whether the maximum sentence available to the courts of this jurisdiction is one that is adequate is a matter upon which we have not deliberated but it may merit some debate and consideration by policymakers. …

37. Next, we would suggest that the Director of Public Prosecutions should not feel constrained by prior judgments of this Court from bringing cases in the High Court where huge sums of money are involved or where the predicate offence is particularly serious. True it is that this involves a burden on juries in such cases, but the alternative, in other words, the exclusion of the High Court as a possible forum, brings distortions to justice.”

63.As was stated at the commencement of this Judgment, I agree that there are no sentencing guidelines for this type of offences.  Each case depends on its own facts.  In my judgment, the present case is serious by reason of the factors below:

(1)  The Defendant had every reason to believe that the funds from Space Interior were proceeds of an indictable offence;

(2)  The Defendant knew that the funds came from Space Interior and that WONG was employed by Space Interior. In other words, he had more than ample reason to believe that the predicate offences involved a breach of trust;

(3)  The predicate offences were very serious;

(4)  The Defendant turned a blind eye to the above mentioned matters;

(5)  The amount laundered by the Defendant was very substantial;

(6)  The money laundering scheme was sophisticated. The Defendant provided WONG with at least images of the chops of his companies. The money laundering scheme involved 3 companies, 5 company accounts and the Defendant’s personal BOC account with numerous inter-account transfers. KCI and OPM were acquired or founded for the purposes of committing the present offences;

(7)  The Defendant derived a very substantial benefit;

(8)  The offences spanned the course of 4 years with 76 deposits and numerous transfers;

(9)  The Defendant committed the offences with an accomplice.

64.In my judgment, the appropriate starting points for the present offences are as follows:

(1)  Charge 1: 3 years 6 months (42 months);

(2)  Charge 2: 4 years 9 months (57 months);

(3)  Charge 3: 5 years 3 months (63 months);

(4)  Charge 4: 4 years 6 months (54 months).

Mitigating Factors

Guilty Plea

65.The Defendant pleaded guilty after the trial dates were fixed.  There is no dispute that he is not entitled to a 1/3 discount.  According to HKSAR v NGO Van Nam 4[2016] 5 HKLRD 1, the appropriate discount is 20% to 25%.  Mr Tsoi submitted that:

(1)  Although the indication of plea came relatively late, it did not make a significant difference to the preparation of the case, since no prosecution witnesses were to be called and the entirety of the Prosecution evidence were already agreed;

(2)  The Defendant actively cooperated with the Prosecution to produce an agreed summary of facts to assist the Court in sentencing so that it can be ready on the original Day 1 of trial to save time and costs;

(3)  The extra hearing(s)  caused by the late plea was minimal, as there were no pre-trial applications or issues taken by the Defendant and the case had always been ready for trial.

66.I do not agree that the late plea made no difference to the preparation of the case for trial.  There was a pretrial review on 13 March 2025.  The issues were wholly unclear in the PTR questionnaire.  Pursuant to the order of this Court, admitted facts were prepared, signed and filed prior to the trial.  That was part of the preparation.  The Defendant only indicated his plea 5 days before the trial date.  By that time, all preparations should have been completed and 6 days of the Court’s diary had been taken up.  Obviously no witnesses were called because the Defendant pleaded guilty.

67.Although a Summary of Facts was prepared by Day 1 of the trial, it was so watered down that it was incomprehensible to the Court and did not even reflect the Admitted Facts dated 15 April 2025.  That Summary of Facts eventually had to be amended before plea was taken.

68.I note that the Prosecution decided to amend the charges after the case was fixed for trial and that the Defendant indicated his plea shortly after that decision.  However, there was no change in the Prosecution’s evidence.  In those circumstances, a 20% discount for the Defendant’s guilty plea is appropriate.

69.The sentences for the 4 charges are reduced to:

(1)  Charge 1: 33.6 months

(2)  Charge 2: 45.6 months

(3)  Charge 3: 50.4 months

(4)  Charge 4: 43.2 months

The Defendant’s Personal Background

70.Mr Tsoi submitted that the Defendant’s parents divorced when the Defendant was a teenager.  His father was said to operate a logistics business.  His father started another family in the Mainland and AGL was set up in the Defendant’s name for the convenience of running the father’s business.  There was conflicting information as to whether the Defendant worked in this business (AGL).  According to Mr Tsoi’s submissions, the Defendant gave up his studies after he graduated from secondary school and started to work in the logistics industry with the intention of inheriting his father’s business in the future.  However, the Defendant was not the operator of AGL until his father’s death in 2016.  At the time, the Defendant was working at various logistics companies to gain experience in 2011 to 2016.

71.The above submission was inconsistent with the mitigation letters from the Defendant, the Defendant’s family and friends.  In his letter, the Defendant stated that he had just taken over AGL shortly before his father died.  According to the Defendant’s mother and some of the Defendant’s friends, the Defendant was forced to take over AGL after his father died.  According to some other letters, the Defendant has been working for his father since he left school.

72.Mr Tsoi submitted that in late May 2016, the Defendant’s father contracted an acute disease and underwent an urgent operation but unfortunately passed away within a matter of days.  The Defendant was then left completely alone in running his late father’s business.  Mr Tsoi submitted that it was during this time that the Defendant was approached by WONG for the alleged “business opportunity” and the Defendant agreed out of greed and without critical thinking.

73.KCI was the first company to be used for the commission of the offences.  The Defendant’s father passed away in late May 2016.  The KCI bank accounts were opened on 6 May 2016.  I do not accept that the death of the Defendant’s father had anything to do with the present case.

74.It is trite law that when faced with serious offences, the Defendant’s personal and family background carries little weight and becomes insignificant as mitigation.  In any event, there is nothing special about the Defendant’s personal or family background.

Clear Record

75.Mr Tsoi submitted that the Defendant had a clear record and is genuinely remorseful for his mistake.

76.Mr Tsoi relied on Attorney General’s Reference (No 70 of 2008) [2009] 2 Cr App R (S)  64.  In that case, a 72-year-old man pleaded guilty to 6 counts of indecent assault against his nieces over a period beginning in the late 1950s and extending into the 1970s.  After a gap of 20 years, a further offence was committed in respect of a great niece in about 1992 or 1993.  The Defendant’s family became aware of the last offence in about 1992 and the Defendant admitted what he had done.  It was decided that if the Defendant promised not to repeat the offences and to undergo treatment, he would not be reported to the police.  The offender saw his general practitioner and attended professional treatment.  The matter came to light when the Defendant’s brother, with whom he was living, fostered a child and a family member gave information to the police.  The Defendant eventually pleaded guilty to one count of indecent assault involving each of the victims and was sentenced to a community order with a requirement to participate in a sex offenders’ programme and was disqualified from working with children, the Attorney General asked the Court to review the sentence on the ground that it was unduly lenient.  The Court of Appeal held:

“It was submitted for the Attorney General that the offender was in a position of trust and the victims were all very young at the time of the offences. In the Court’s view, there was a danger that the sentencing process should be approached as if it involved compartmentalization. In many cases of serious sexual assault it was true that too much weight should not be given to the age of the offender or indeed the age of the offences, particularly if the offender had deliberately pressurized his victims into silence. These matters did not cease to be factors which might form part of the available mitigation. Each case must depend on the individual circumstances. The sentencing judge carefully considered each aggravating feature of the offence but in the end decided to impose a non-custodial sentence on an offender aged 72 in poor health, none of whose offences had involved sexual penetration and all but one of whose offences had happened 30 years or more previously …” (my emphasis)

77.It is evident that the above mentioned case was highly exceptional.  The factors considered by the court are not present in the present case.

78.It is trite law that a clear record per se is not a ground for an additional discount in serious cases. Sentencing in Hong Kong 11^th Editionexplains:

“[7-6] Credit for a clear record is, however, by no means a given. Much will depend upon the nature of the offence and the position of the offender. In HKSAR v Law Num-Chun [2014] 6 HKC 606, 617, Lunn VP said:

[T]he principle is that good character is not a factor relevant generally to determining the starting point to be taken for sentence in serious criminal offences for which a deterrent sentence is required.

[7-7] … Serious white collar crime attracts condign sentences: R v Pantano (1990)  49 A Crim R 328, 30…

[7-14] The practice of the courts in recent times has been to give the accused who pleads guilty a sentencing discount of one-third… However, much depends on the timeliness of the plea, with the full discount being awarded for a plea at the earliest opportunity, and a lesser discount attaching to pleas entered at a later stage: HKSAR v Ngo Van Nam [2016] 5 HKC 231…. The accused who pleads guilty at the outset will receive a full discount irrespective of whether he has a criminal record, is caught red-handed or is genuinely remorseful. Since the ‘one-third rule’ has solidified into principle, there is no scope for a further discount, save in exceptional circumstances, such as where assistance is provided to the authorities. In HKSAR v Yan Wai-ming [2003] HKCU 264 (CACC 417/2002, 26 February 2003, unreported), Stuart-Moore VP said:

In the days before the discount of one-third on timely pleas of guilty became standard practice, previous good character used to be one of many factors which judges would take into account in deciding what discount to give on a plea of guilty. The one-third discount is usually, as we have said on numerous occasions, to be taken as the high watermark of the discount unless there are very special factors to be taken into account.

[7-15] In Secretary for Justice v Ko Wai-kit [2001] 3 HKLRD 751, 757…, Stock JA said that the ‘lack of previous convictions will often be subsumed in the credit given for a plea of guilty’. In Secretary for Justice v Lee Cho-keung and Ors [2004] 4 HKC 179, 189, the court noted that ‘the established course is now to view the presence of good character as part and parcel of the one-third discount given upon a plea’. The ‘element of good character is normally taken as being included in the one-third discount for a plea of guilty’: Secretary for Justice v Tso-Tsz-kin [2004] 2 HKC 139, 144. … In Secretary for Justice v Cheng Tsz-hin [2020] 1 HKC 576 … a judge who awarded a two-month sentencing discount to an accused who had been convicted of dangerous driving causing death for his clear record and perfect driving record was held to have erred. … But a clear record is not, of itself, a ground for suspending a sentence of imprisonment: Secretary for Justice v Mong Hon-ming [2009] 3 HKC 482, 493.

[7-16] The judge who granted an accused who pleaded guilty an additional discount of three months’ imprisonment ‘to take account of her [hitherto] good character’, was said to have erred in Secretary for Justice v Chau Wan-fun [2007] 1 HKC 423, 428 … The discount for a guilty plea already has ‘built into it an allowance for good record where there is one’: HKSAR v Yung Wai-siu [2001] 1 HKLRD 277, 279 … The withholding of an additional discount for a clear record ‘has not been a valid ground of appeal for a considerable time’: HKSAR v Yan Wai-ming [2003] HKCU 264 (CACC 417/2002, 26 February 2003, unreported). In this context, a clear record is not so much a mitigating factor as a ‘neutral feature in the case’: HKSAR v Wen Zelang [2006] HKLRD 460, 465 …

[7-17] In HKSAR v Wong King-Wai [2008] 2 HKC 614, 622, Stuart-Moore ACJHC said:

Personal circumstances including a clear record may, of course, have a bearing on mitigation for offences which are comparatively minor in nature. However, for serious offences we have indicated time and time again that, with the introduction of the ‘one-third rule’ which in usual circumstances provides a discount of a third of the prison sentence that would normally have been imposed after trial following timely pleas of guilty, there should be no further discount for a clear record unless evidence of positive good character is forthcoming.”

Age of the Defendant

79.Mr Tsoi submitted that the Defendant committed these offences out of immaturity and insensitivity in the early years when he just started running his own business.

80.Sentencing in Hong Kong 11^th Edition explains:

“[30-23] In Secretary for Justice v Chan Tsz-Tim and Ho Wan-chiu [2015] 2 HKC 88,93 … Yeung VP said:

Young age is very often a mitigating factor, particularly in trivial offences …

[30-25] Offenders who are in their late teens will generally be sentenced differently to those who are in their early 20s or beyond: R v Lee Kong and Anor (CACC 556/1994, 14 March 1995, unreported)  …

[30-26] Youth notwithstanding, the court must keep in mind the classical principles of sentencing which, apart from rehabilitation, include retribution, deterrence and prevention: Attorney General v Fong Ming-yuen [1989] 1 HKC 327… The interests of the community as a whole must also be considered: Attorney General v Law Ying-Cheung [1981] 1 HKC 161, 163 …

[30-27] In Re Applications for Review of Sentences [1972] HKLR 370, 417: it was explained that: ‘The personality, youth or personal circumstances of the offender may pale into insignificance because of the magnitude or prevalence of the offence in question’. If serious crimes are committed by young persons, they cannot expect to turn their age to their advantage upon conviction. The courts, instead, must be prepared to ‘steel themselves, unless there are particularly powerful and peculiar contrary reasons attaching to the circumstances of the offender and his involvement in the offence, to the imposition of substantial prison terms’: HKSAR v Law Ka-kit and Ors [2003] 2 HKC 178, 187.

[30-28] In Attorney General v Li Chi-ko [1987] 6 HKLR 1233, 1235 … it was said that, in the case of serious robbery, a term of imprisonment is inevitable in the absence of exceptional circumstances, and ‘youth of itself is not such an exceptional circumstance, although extreme youth might be’. This approach is of general application: HKSAR v Bugaay [2008] 6 HKC 326, 331. Such extreme youth, the court added in Li Chi-ko, could be claimed by an offender aged 15 years. In Attorney General v Yau Wing-hong [1995] 3 HKC 95, 98, the court emphasized that ‘a person older than that cannot plead ‘extreme youth’”

81.The Defendant is now 36 years old.  He committed these offences between the ages of 27 to 31 years old.  He started working after he graduated from secondary school.  In other words, he has been working for 9 years prior to the commission of these offences.  He can hardly be described as of ‘extreme youth’, immature or lacking in working experience.

Delay

82.Mr Tsoi submitted that the Defendant was arrested on 18 September 2020 but was only formally charged on 15 June 2023, ie 33 months after his arrest.  Mr Tsoi stated that the Defendant is now 36 but was 31 when he was arrested.  Over the last 4.5 years, he has been attempting to live a normal life and continued to struggle with taking care of his family.  The matter has been hanging over the Defendant’s head for 4.5 years.  The Defendant and his family had been subjected to tremendous pressure.  The Defendant has been overshadowed by the present case between the ages of 31 and 36, which is “the golden age” of his life.  Given that he has fully acknowledged the seriousness of the offences of which he stands convicted and the significant term of imprisonment it inevitably entails, the Defendant is expected to spend most of his thirties behind bars.

83.Sentencing in Hong Kong 11^th Edition explains:

“[30-130] Family circumstances are often prayed in aid in mitigation by convicted persons. However, ‘family hardship which is usually attendant upon the conviction is to be viewed as a part of the price an accused must pay for the crime’: HKSAR v Li Kwok-Ching [2005] HKCU 1702 (HCMA 1132/2005, 30 November 2005, unreported). Those who commit offences should keep in mind ‘the principle that the adverse effect of imprisonment upon an offender’s family is not a factor normally to be taken into account’: HKSAR v Chan Kin-chung [2002] 4 HKC 314, 321. Family circumstances, in any event, ‘are matters which a wise man would take into consideration before he commits an offence and not after’: HKSAR v To Yiu-cho [2009] 5 HKLRD 309, 311…

[30-131] … In HKSAR v Shum Chung-wai [2002] 2 HKLRD 81, 87, Lugar-Mawson J said: ‘This court has said many times that family circumstances should be disregarded, particularly when sentences for serious offences are concerned’. When a robber sought early release so he could look after his sick wife, this was refused by Poon JA, because he ‘knew full well of her circumstances when he committed the present offence’: HKSAR v Thapa Krishna Kumar [2023] HKCU 5053.”

84.If the Defendant has to spend his “golden years” in prison, he is the author of his own wrong.

85.As for the Defendant’s conduct since the offences, Sentencing in Hong Kong 11^th Edition explains:

“[30-62] The way in which the accused has conducted himself since he committed the offence may sometimes affect sentence. If there is ‘clear evidence of rehabilitation’ this may have relevance: … R v Wong Hung-biu (CACC 579/1988, 9 March 1989, unreported)  …

[30-63] A discount, however, is by no means a given, as where the offence involves a serious sexual assault, notwithstanding that the time between the offence and the arrest is substantial: Secretary for Justice v Leung Yuet-hung [2014] 5 HKC 68… Absent a character change or moral conversion’, the mere absence of criminality by an accused over the years since the offence may not avail him: HKSAR v Yamin [2017] HKCU 3086 (CACC 360/2016, 1 December 2017, unreported). Something more substantial will normally be required.” (My emphasis)

86.According to the Defendant, up until now, he has not even been able to establish a direction for his career and has only taken up some part time work as a delivery attendant.  This can hardly be described as exceptional or rehabilitation.

87.In relation to delay, Sentencing in Hong Kong 11^th Edition explains:

“[30-83] In Mills v HM Advocate and The Advocate General for Scotland 2002 SCR 860, 877, Lord Hope said that a delay in bringing the accused to justice is widely recognized as a mitigating factor that can be taken into account when he is being sentenced.

[30-84] This usually arises where the prosecution is at fault for the delay: HKSAR v Lau Kin-yu [2003] HKCU 251 (HCMA 391/2002: 13 March 2003, unreported). Such a delay might cause the accused to be ‘under the strain of legal proceedings for a very long time’: Attorney General v Ling Kar-fai (No.2) [1977] 2 HKC 651, 654. If the accused is himself responsible for the delay, he cannot expect to benefit: HKSAR v Chan Chun-chuen (CACC 233/2015, 30 October 2015, unreported).

[30-85] In Secretary for Justice v Schmitt [2008] HKCU 979 (CACC 12/2006, 17 June 2008, unreported), Stuart-Moore VP noted that there is delay in every case before trial, and that the ‘real question is whether there has been an unreasonable delay, through no fault of a Defendant, which has contributed to his punishment’. The court will also need to be satisfied that the delay has ‘resulted in unfairness to the accused’: R v L (1995)  84 A Crim R 142, 145. If there is a delay resulting from a very extensive (and necessary)  investigation, the accused cannot expect to benefit therefrom: Secretary for Justice v Ip Hon-ming and Anor [2015] 1 HKC 143, 168.

[30-86] In HKSAR v Law King-yip and Ors [2004] HKCU 1391 (CACC 369/2003, 14 October 2004, unreported), (as approved in HKSAR v Cheung Suet-ting [2010] 6 HKC 249, 257), complaint was made, by one of several persons convicted of conspiracy to defraud, about the delay of over 30 months between the dates of arrest and trial. It was further argued that the trial of 108 hearing days had constituted an additional hardship, ‘worse’, so it was said, ‘than prison’. In rejecting these factors as mitigation, the court commented that the delay had to be viewed in the context of the size of the investigation that the police had to conduct. The conspiracy had lasted for more than a year, there were many victims, expert witnesses had to be consulted, and the prosecution was not at fault for the delay. The trial had been listed for 20 days, but overran because the Defence had vigorously contested the case. In these circumstances, Lunn J said the court was satisfied that ‘neither the delay in the commencement of proceedings nor the length of the trial itself are factors relevant to the sentence imposed’.

[30-87] As to the extent to which a delay might affect sentence, mere length of time between the commission of the offence and the prosecution ‘is a factor of limited weight’: FGC v Western Australia (2008)  183 A Crim R 313, 341 …. In HKSAR v Chiang Lily [2013] 3 HKLRD 18… there had been a delay in both the trial and the hearing of the appeal, neither attributable to the accused, who, in consequence, was awarded a sentencing discount of two months. In HKSAR v Ho Hon-chung (Daniel) [2004] HKCU 773 (CACC 350/2002, 29 June 2004, unreported), Woo VP said:

We should mention that delay as a mitigating factor would necessarily only warrant a relatively short reduction in sentence, for otherwise, it might give rise to a wrong idea that it would be better for a Defendant to unjustifiably drag out a case in which he is eventually convicted rather than to plead guilty or to proceed to trial expeditiously.”

88.According to the Court record, the Defendant first appeared before the Magistracy on 14 July 2023.  He first appeared before the District Court on 14 September 2023.  The trial dates were fixed on 14 May 2024.  Between 14 September 2023 and 14 May 2024, the case was repeatedly adjourned pursuant to the Defendant’s request.  The complaint about the alleged delay relates to the period between the Defendant’s arrest on 18 September 2020 (day of arrest)  and 15 June 2023 (the date he was charged).

89.The Defence relied on HKSAR v Chu On Chi [2007] HKCLRT 463 (CACC 484/2006). Secretary for Justice v Hui Siu Man [1999] 2 HKLRD 236 and HKSAR v Chan Yuk Kwan (CACC 26/2001).

90.In Chu On Chi, the Defendant pleaded guilty to six charges of fraud.  Using her employer’s personal information, the Defendant obtained 5 credit cards, 4 of which she then used.  She admitted to all the offences when she was arrested by the police in December 2004 and in the subsequent records of interviews.  On 6 July 2005, the Defendant was given an unconditional discharge by the police.  She was not re-arrested until 11 September 2006 and the prosecution was laid against her in September 2006.  In the meantime, the Defendant had repaid the relevant debts and made efforts to rehabilitate by starting a job as a secretary.  She appealed against the sentence of 20 months’ imprisonment.  At issue was the effect of the delay in prosecuting the case.  The Court of Appeal held that even though time was needed for the police to collect the relevant evidence, the 21-month delay in prosecuting the case was extremely serious.  The prosecution failed to provide a reasonable explanation.

91.There are marked differences between Chu On Chi and the present case:

(1)  The Defendant in Chu On Chi confessed to all the offences both upon arrest and in 4 cautioned statements. Subject to the question of voluntariness, the confessions constitute cogent admissible evidence against her. There are no such admissions in the present case. It is trite law that the admissions made by another person is no evidence against this Defendant;

(2)  In Chu On Chi, the Defendant was given an unconditional discharge. This did not happen in the present case;

(3)  In Chu On Chi the Defendant made full restitution during the delay. The Defendant made no restitution in the present case.

92.In Hui Siu Man, the Defendant pleaded guilty to 6 offences of forgery and theft and was sentenced to 21 months’ imprisonment, to run concurrently and suspended for 3 years.  The Secretary for Justice sought a review of sentence on the ground that it was wrong in principle to suspend sentences for serious commercial fraud involving a breach of trust.  The Defendant worked in a bank, X, and the conviction was in relation to the fraudulent transfers of funds from the bank’s clients’ accounts to an account over which he had effective control. The Defendant forged authorization letters purportedly issued by the bank’s clients in order to effect this.  Upon confrontation in mid-May 1997, the Defendant signed a letter admitting wrongdoing and was dismissed, making full restitution on 30 May 1997, using money borrowed from family and friends which he was still repaying.  The Defendant was arrested on 28 July 1997 but was not charged until 3 June 1998.  The delay was due to a lack of cooperation on X’s part, as it had failed to produce the relevant documents and statements by its officers.  At issue was whether there were any exceptional circumstances which would justify the Judge’s suspension of sentences.

93.The Court of Appeal held:

(1)  Full restitution was to be encouraged, particularly in commercial crimes. But this could only be done if real weight was given to it as a factor mitigating sentence. However, restitution alone did not warrant a suspension of sentences otherwise that would be an inducement to persons to take the risk involved in such offences, knowing that they could avoid imprisonment simply by paying back the amount they had stolen; and

(2)  The delay in the prosecution of the offence, following the Defendant’s acknowledgement of guilt, was also an important factor to consider. The delay had given the Defendant the opportunity to rehabilitate himself by obtaining steady employment, and to repay a large amount of the money he had borrowed to make restitution.

94.Again, there are marked differences between Hui Siu Man and the present case.  In Hui Siu Man, the Defendant confessed to the crimes upon confrontation.  Subject to the question of voluntariness, such confessions constitute admissible and cogent evidence against the Defendant.  During the period of delay, the Defendant in Hui Siu Man borrowed money to make full restitution to the victim, obtained steady employment and repaid most of the loans.  There is no restitution in the present case.  The Defendant does not even have steady employment.

95.Chan Yuk Kwan was a case of credit card fraud.  The Defendant forged application forms for credit cards, obtained cards from a number of banks to whom the applications were made and then incurred expenses by using the cards.  All the offences, save two, took place in January 1998.  The applicant was arrested in May 1998 but only appeared before the District Court in December 2000.  He pleaded guilty to all 13 charges and was sentenced to a total of 4 years’ imprisonment.  He applied for leave to appeal against that sentence.

96.The Court of Appeal found that there were 2 significant factors which would affect sentence:

“(1)  Reimbursement

19. The first is the fact that the applicant, well before trial, paid back to the banks the sum of $91,453. That sum is in addition to a sum of $5,500 which was seized from his premises when the police first went there. What happened was that when the applicant was interviewed he told the police that he still had money which he had obtained by the use of the cards, and some days later he took the police to his home, and he handed over $34,000. Then he took them to a bank where, as he had told them, he had an account which held some of the proceeds of his crimes; and he withdrew money, and gave the police $51,453. His wife’s bail money came from the proceeds of his offences. He told the police that, and that amount was recovered as a result. So, the long and the short of this is that the banks have been reimbursed to the tune of $96,953, in respect of which the applicant has himself been proactive in recovering $91,453 which he has handed over. …

(2)  Delay

21. Then there is the question of delay in charging the applicant and in bringing these proceedings. This applicant was arrested in mid-May 1998. Yet the applicant was not charged for another 18 months or so, and the case did not come before the District Court for sentence until December 2000. That is a period of over two and a half years. It is not suggested that this applicant brought the delay upon himself. On the contrary, he admitted his guilt the very first time he was arrested, in May 1998. It was said in the proceedings below that time had been needed to make investigations to see whether there were other offences. We accept that, but it cannot possibly account for a delay of this length or anything like it. Mr Zervos, who appears today for the respondent, very properly accepts that there is no good reason for the extent of the delay. Significant delay may well in a particular case go in reduction of sentence, because of the stress occasioned when a case hangs over the head of a person awaiting trial, stress over and above that caused where there is no prolonged delay.”

97.Similarly, there are marked differences between Chan Yuk Kwan and the present case:

(1)  In Chan Yuk Kwan, the Defendant admitted the offences upon arrest. Subject to the question of voluntariness, this was admissible and cogent evidence against him. There was no such admission from the Defendant in the present case;

(2)  In Chan Yuk Kwan, not only was there restitution, the Defendant took proactive steps to help the police with their investigation. This did not happen in the present case;

(3)  In Chan Yuk Kwan the prosecution properly conceded that there was no good reason for the extent of the delay. This is not the prosecution’s position in the present case.

98.In his supplemental submission, Mr Tsoi acknowledged that unlike Chu On Chi, Hui Siu Man and Chan Yuk Kwan where the Defendants admitted guilt upon arrest.  In the present case, the Defendant remained silent.  However, he argued that the police obtained all evidence which they eventually relied on against the Defendant, including statements of PW1 and PW2 (the shareholders and directors of Space Interior), listing all the induced payments and information from WONG in his 2 video-recorded interviews by no later than September 2020.  He stated that in those circumstances, whether the Defendant admitted commission of the offence at once does not assist the Prosecution in explaining the 33 months’ delay.

99.Mr Tsoi further relied on HKSAR v Chiu Chi Wing (CACC  243/2012, unreported, 18 October 2013)  where the Court of Appeal endorsed the principles of delay being a mitigating factor in Scook v The Queen [2008] A Criminal Review 164. He submitted that in the present case:

(1)  the delay has not been caused by difficulties in detecting, investigating or proving the offences committed by the offender, and the period of the delay is unreasonable in the circumstances;

(2)  the delay was not caused by the offender’s obstruction or lack of cooperation with the State, prosecuting authorities or investigatory bodies but the offender’s reliance on his or her legal rights is not obstruction or lack of cooperation for this purpose; and

(3)  the delay was not caused by the offender’s reliance exercising his rights, eg in bringing any interlocutory appeals or processes.

100.In fact, 7 factors were identified in Scook:

(1)  First, delay is not, of itself, a mitigating factor.

(2)  Secondly, delay will not ordinarily be a mitigating factor if it has been caused by difficulties in detecting, investigating or proving the offences committed by the offender, and the period of the delay is reasonable in the circumstances.

(3)  Thirdly, delay will not ordinarily be a mitigating factor if it is caused by the offender’s obstruction or lack of co-operation with the State, prosecuting authorities or investigatory bodies, but the offender’s reliance on his or her legal rights is not obstruction or lack of co-operation for this purpose;

(4)  Fourthly, delay will not ordinarily be a mitigating factor if it results from the normal operation of the criminal justice system, including delay as a result of the offender or a co-offender exercising his or her rights; for example, interlocutory appeals and other interlocutory processes;

(5)  Fifthly, delay may be conducive to the emergence of mitigating factors; for example, if, during the period of delay, the offender has made progress towards rehabilitation or other circumstances favourable to him or her have emerged;

(6)  Sixthly, delay (not being delay of the kind described in the second, third and fourth guiding principles)  will ordinarily be a mitigating factor if:

(a)  the delay has resulted in significant stress for the offender or left him or her, to a significant degree, in ‘uncertain suspense’; or

(b)  during the period of delay the offender has adopted a reasonable expectation that he or she would not be charged, or a pending prosecution would not proceed, and the offender has ordered his or her affairs on the faith of that expectation.

(7)  Seventhly, delay caused by dilatory or neglectful conduct by the State, prosecuting authorities or investigatory bodies may result in a discount of the sentence that would otherwise be imposed on the offender, if the court thinks it an appropriate means of marking its disapproval of the conduct in question.”

101.It was expressly stated that these 7 factors were not intended to be exhaustive or inflexible.

102.In the present case, the Prosecution had to prove beyond a reasonable doubt that:

(1)  The Defendant dealt with proceeds;

(2)  The proceeds were the proceeds of an indictable offence; and

(3)  The Defendant knew or had reason to believe that they were proceeds of an indictable offence.

103.Mr Tsoi submitted that when the Defendant was arrested, Space Interior has already identified the related payments and the accounts into which those funds were deposited.  Firstly, this does not mean that the police does not have to conduct its own investigation.  Secondly, although Space Interior may have conducted its own investigation as to the existence of the alleged renovation works, the Defendant has the right to insist on strict proof of the falsity of the alleged contracts.  In that event, the Prosecution would have to prove that the alleged contracts of renovation were false.  The investigation by Space Interior is hearsay.  In order to prove that these alleged contracts were false, the police had to interview and take statements from the clients who allegedly received the renovation works.  There were also numerous invoices from Space Interior.  According to the chronology submitted by the Prosecution, between September 2020 and June 2022, the police interviewed 24 civilian witnesses to ascertain the existence of the alleged renovation works purportedly provided by KCI, AGL and OPM.

104.The charges in the present case spanned a period of 4 years and involved 3 companies and 10 bank accounts.  Five of these accounts were company accounts.  The police had to obtain documents to show that the Defendant was a 90% shareholder of KCI and sole proprietor of AGL and OPM.  Although the Defendant was a 90% shareholder of KCI and sole proprietor of AGL and OPM, it does not mean that he was the only authorized signatory to the relevant bank accounts.  Hence, the police had to obtain relevant documents in respect of the same.  In addition, because companies were used to launder the funds, the police had to ascertain whether the relevant companies had any genuine businesses, which required documents from both the Companies Registry and the Inland Revenue Department.  Once the bank statements were available, the police had to analyze the fund flow of the proceeds.  In fact, between September 2020 and June 2022, the police obtained documents and analysed 21 bank accounts.  The analysis of fund may not be most important to conviction but is clearly relevant for sentence.

105.Mr Tsoi further submitted that WONG had already admitted that the alleged contracts did not exist.  Firstly, WONG’s confessions are only admissible if they are not challenged or the Prosecution proves that they were voluntary beyond all reasonable doubt.  Secondly, even if they were admissible, it is trite law that an admission from another person is not evidence against this Defendant.  Thirdly, the matter was further complicated by WONG’s abscondance on 4 March 2022.  The case papers were sent to the Department of Justice for legal advice on 22 June 2022.  By that time, WONG had absconded and is therefore not a party to these proceedings.  His cautioned statements cannot be produced.

106.It was unclear what issues were in dispute.

107.Even if the Defendant admitted that the funds from Space Interior were proceeds of an indictable offence and that the Defendant had dealt with them, the Prosecution still had to prove the Defendant’s mens rea (i.e. he knew or had reason to believe that they were the proceeds of an indictable offence).  In the absence of any admission from the Defendant, this can only be considered and inferred from a full set of circumstances.  Evidence in relation to the role of the Defendant and whether he had knowledge of WONG’s fraud or had participated in such fraud were also relevant factors for sentence.

108.The Defendant was arrested in the latter part of 2020.  This was during the height of the pandemic and the unprecedented violence and civil unrest that started in mid-2019.  Police resources were strained to their limits at the time.

109.In the light of all the above circumstances, the delay was not unreasonable.  Further, there is nothing to suggest that the Defendant suffered any unfairness as a result of the delay.

Totality

110.Mr Tsoi submitted that although there are 4 charges, it was in reality one arrangement between WONG and the Defendant for the bank accounts of the Defendant’s companies to be used.  He asked that totality be taken into account and urged the Court to order most of the sentences to be served concurrently (paragraph 4(5)  of the original Submissions).

111.The amounts in each Charge are wholly different and distinct.  The Charges were framed to reflect the amounts originally deposited by Space Interior as a result of WONG’s fraud.  There was no possibility of double counting. I also disagree that it was only one agreement.  Originally, the money was only laundered through the bank accounts of KCI and AGL.  There was subsequently a further agreement to set up and use OPM as well.  Technically, the sentences for the Charges should be consecutive.  However, the Court has to consider totality.

112.The total amount dealt with by the Defendant was HK$30,434,126.50.  In my judgment and by reason of all the above mentioned matters, the appropriate overall starting point of the 4 charges is 6 years and 3 months (i.e. 75 months).  After a 20% discount, the overall starting point is reduced to 60 months.

113.I accordingly sentence the Defendant as follows:

(1)  Charge 1: 33 months;

(2)  Charge 2: 45 months;

(3)  Charge 3: 50 months; and

(4)  Charge 4: 43 months.

114.The sentences for Charges 1, 2 and 3 are to be served concurrently but 10 months of Charge 4 are to be served consecutively to the sentence for Charges 1, 2 and 3, i.e. a total of 60 months.

Annex 1